As filed with the Securities and Exchange Commission on October 24, 1997.
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
THE QUIZNO'S CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Colorado 84-1169286
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1099 18th Street
Suite 2850
Denver, Colorado 80202
(303) 291-0999
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
PATRICK E. MEYERS, ESQ.
Vice President and General Counsel
1099 18th Street
Suite 2850
Denver, Colorado 80202
(303) 291-0999
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
_________________
Copies to:
LYLE B. STEWART, ESQ.
Lyle B. Stewart, P.C.
3751 S. Quebec Street
Denver, Colorado 80237
(303) 267-0920
________________
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box:
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box:
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. _______
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each
Class of Proposed Maximum Proposed Maximum Amount of
Securities to Be Amount to Offering Price Aggregate Registration
Registered Be Registered Per Share (1) Offering Price (1) Fee (1)(2)
<S> <C> <C> <C> <C>
Common Stock
($.001 par
value) 100,000 shares $5.59375 $559,375.00 $170.00
=========== ============== ======== =========== =======
</TABLE>
(1)Calculated in accordance with Rule 457(c) on the basis of the average of
the high and low sale prices of the Registrant's Common Stock on October 20,
1997, as reported by the Nasdaq SmallCap Market.
(2)Registration Fee is calculated on the basis of 1/33 of 1% of the Proposed
Maximum Aggregate Offering Price.
_________________________________________
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 24, 1997
PROSPECTUS
100,000 Shares
THE QUIZNO'S CORPORATION
Common Stock
(par value $.001 per share)
This Prospectus relates to 100,000 shares of common stock, par value
$.001 per share ("Common Stock"), of The Quizno's Corporation, a Colorado
corporation (the "Company"), which may be offered for sale from time to time
by certain stockholders of the Company (the "Selling Stockholders"), or by
their pledgees, donees, transferees or other successors in interest, to or
through underwriters or directly to other purchasers or through agents in one
or more transactions at varying prices determined at the time of sale or at
negotiated prices (the "Offering"). See "Plan of Distribution."
The Company is a franchisor and operator of quick service
restaurants ("QSRs") under the name "Quizno's Classic Subs."
The Company will not receive any of the proceeds from the sale of
the shares of Common Stock (the "Shares") by the Selling Stockholders, but
will receive funds upon the exercise of warrants, currently held by the
Selling Stockholders, that are exercisable for the Shares registered hereby
(the "Warrants"). The expenses of registration under the Securities Act of
1933, as amended (the "Securities Act"), of the Shares which may be offered
hereby will be paid by the Company.
The Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "QUIZ". On October 20, 1997, the last sale price of the Common Stock
was reported as $5 19/32.
SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN RISKS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY.
_____________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE SUCH DATE.
GENERATE THE TABLE OF CONTENTS AND REMOVE THE DOUBLE SPACING.
__________________
TABLE OF CONTENTS
__________________
Page
----
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 3
THE COMPANY 4
RISK FACTORS 5
USE OF PROCEEDS 9
SELLING STOCKHOLDERS 9
PLAN OF DISTRIBUTION 10
INDEMNIFICATION OF OFFICERS AND DIRECTORS 11
LEGAL MATTERS 11
EXPERTS 11
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information concerning the Company filed with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at its office at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the Regional Offices of the
Commission at Citicorp Center, 300 West Madison Street, Chicago, Illinois
60661 and Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Shares of the Common Stock are traded on the Nasdaq SmallCap Market. Such
reports, proxy statements and other information can also be inspected and
copied at the offices of The Nasdaq Stock Market, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits thereto, the "Registration
Statement"), under the Securities Act with respect to the securities offered
pursuant to this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information, reference is made to the Registration Statement and
the exhibits filed as a part thereof. Statements contained herein concerning
any document filed as an exhibit are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934
(the "Exchange Act") by the Company (File No. 000-23174) are incorporated
herein by reference:
(a) the Company's annual report for the fiscal year ended
December 31, 1996 filed on Form 10-KSB, as filed with the Commission on March
31, 1997;
(b) the Company's quarterly reports for the periods ended March
31, June 30, and September 30, 1997, each filed on Form 10-QSB, as filed with
the Commission on May 15, August 12, and October 9, 1997, respectively; and
the June 30, and September 30, 1997, as amended on Form 10-QSB/A on August 19,
1997 and October 14, 1997, respectively.
(c) the Company's current reports dated January 21, April 2, May
28, June 27, July 31 and August 13, 1997 on Form 8-K; and
(d) the description of the Company's Common Stock which is
contained in the Company's Registration Statement on Form 8-A filed under the
Exchange Act, including any amendment or reports filed for the purpose of
updating such description.
All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering pursuant to this
Prospectus shall be deemed to be incorporated by reference and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon oral or written request of any such
person, a copy of any or all of the documents incorporated herein by
reference, other than the exhibits to such documents (unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates). Requests should be directed to the Investor
Relations Department, The Quizno's Corporation, 1099 18th Street, Suite 2850,
Denver, Colorado 80202, telephone (303) 291-0999.
THE COMPANY
The Company is engaged in franchising and, to a lesser extend,
operating QSRs (the "Restaurants") using the registered service mark "Quizno's
" and the name "Quizno's Classic Subs." The Restaurants offer a menu of
submarine style sandwiches, salads, soups, desserts and beverages, including
"Classic Lite" selections of submarine sandwiches and salads designed for
consumers who are looking for a low-fat, healthy alternative to typical fast
food products.
The Company believes that the submarine sandwiches offered in the
Restaurants are distinctive in the market for several reasons. Each submarine
sandwich is prepared after the customer orders and with special ingredients,
recipes and techniques. These ingredients, recipes and techniques are
controlled to provide uniformity of taste and quality among all of the
Restaurants.
One of the most important distinctions of the Quizno's sandwich
product is that it is served to the customer warm. Each sandwich is prepared
open face and run through a conveyor oven that toasts the bread, melts the
cheese and enhances the flavors of the meats.
The Company focuses on the quality of the ingredients contained in
the food products it uses and requires that all of its specified ingredients,
which are generally higher quality than those that other submarine sandwich
shops use, be purchased from approved suppliers. The cheeses used in the
Restaurants are all natural. The Italian style meats include a wine-cured
Genoa salami, pepperoni and capicola, an Italian spiced ham. The turkey
breast is real turkey breast.
The Restaurants also are required to use certain products which are
prepared for the Company in accordance with proprietary recipes developed by
the Company. Foremost among these is Quizno's special recipe soft baguette
style bread and its red-wine based vinaigrette dressing used as a base on most
of the sandwiches. In addition, the Restaurants use the Company's proprietary
recipe tuna mix blend, garlic oil blend, and marinara sauce.
The Restaurants' upscale decor is designed to convey an Italian deli
ambiance and to match the upscale QSR market niche represented by the product.
The typical Restaurant has a seating capacity of 20 to 60 customers at up to
30 tables. Open kitchens allow customers to watch as their sandwiches are
prepared. The decor package for the Restaurants includes framed reproductions
of old Italian food product labels, hand-painted Italian style posters. The
Italian theme is carried through in standard red and green seating fixtures
against a black and white ceramic tile floor. Real wood trim adds a rich
warmth to the dining room not found in typical fast food dining environments.
Besides a pleasant upscale environment for in-house dining, the
Restaurants offer conveniently packaged meals for carry out to serve lunch
time office workers and to serve the home meal replacement segment of the
market.
Quizno's Restaurants were first opened in 1981 by the Company's
predecessor. As of September 30, 1997, there were 241 Restaurants in
operation, of which 13 are Company owned, and agreements were in place for the
opening of an additional 170 franchised Restaurants.
The Company's principal executive office is located at 1099 18th
Street, Suite 2850, Denver, Colorado 80202, and its telephone number is (303)
291-0999.
RISK FACTORS
Each prospective investor should carefully consider the following
factors inherent in and affecting the business of the Company, and this
offering before making a decision to purchase the Common Stock offered hereby.
NO OPERATING PROFIT TO DATE
The Company began business operations in January 1991 and went
public in early 1994. The Company has not yet earned a profit in any year.
The Company had net losses applicable to common stockholders of $1,075,908 in
1996, $348,512 in 1995 and $768,266 in 1994.
COMPETITION FOR BUSINESS
The restaurant industry is highly competitive with respect to price,
service, food quality and location and there are numerous well-established
competitors possessing substantially greater financial, marketing, personnel
and other resources than the Company. Many of the Company's competitors have
achieved significant national, regional and local brand name and product
recognition and engage in extensive advertising and promotional programs, both
generally and in response to efforts by additional competitors to enter new
markets or introduce new products. The quick service industry is
characterized by the frequent introduction of new products, accompanied by
substantial promotional campaigns.
Industry data indicates that over the decade of the 1990s, the
number and frequency of Americans eating out has increased. However, such
data also indicates that the number of restaurants, and particularly QSRs,
have increased more rapidly than the number of customers during this decade.
Increasing competition has reduced margins and made consistent profitable
operations more of a challenge.
Culinary fashions among Americans will also impact the Company's
profitability. As eating habits change and types of cuisine move in and out
of fashion, the Company's challenge will be to maintain a menu within the
Company's distinctive culinary style that appeals to an increasing market
share.
In response to flat growth rates and declines in average sales per
restaurant, certain of QSR companies have adopted "value pricing" strategies.
Such strategies could have the effect of drawing customers away from companies
that do not engage in discount pricing and could also negatively impact the
operating margins of competitors that do attempt to match competitors price
reductions. Continuing or sustained price discounting in the quick service
industry could have an adverse effect on the Company.
COMPETITION FOR AND DEPENDENCE ON AREA DIRECTORS, FRANCHISEES AND LOCATIONS
The Company's future success will depend, in part, upon its ability
to attract qualified Area Directors and franchisees, who will be primarily
responsible for the development of the Quizno's concept in their regional or
local area, and upon the ability of its Area Directors and franchisees to
obtain suitable Restaurant locations and sufficient financing to successfully
develop and operate Restaurants. The market for suitable Restaurant locations
is highly competitive because both restaurant and non-restaurant retail
operations compete for prime real estate sites. The Company will train and
work with its Area Directors and franchisees to maintain the quality and
ambiance that are integral to the Quizno's concept. However, no assurance can
be given that the Company's Area Directors and franchisees will be successful.
VIABILITY OF CONCEPT NATIONWIDE
To date, most of the Company's mature franchises are located in
Colorado and Colorado is the Company's most developed market. While
franchisees of the Company have opened over 175 Restaurants in other markets,
there can be no assurance that the Company's concept of a higher quality,
health conscious food product, served in a Italian deli-like ambiance, will
appeal to consumers in other areas of the United States.
ABILITY TO ACHIEVE DESIRED EXPANSION
The Company's growth strategy is to focus on the controlled
development of additional franchised and Company-operated Restaurants in
selected markets across the United States. The Company's ability to expand
will depend on a number of factors, including the availability and cost of
suitable locations, the hiring, training and retraining of skilled management
and other personnel, the availability of adequate financing, the selection and
acceptability of franchisees and other facts, some of which are beyond the
control of the Company. There can be no assurance that the Company or its
franchisees will be able to continue to open the planned new Restaurants or
that, if opened, those Restaurants can be operated profitably. The Company
has not yet been able to institute a program with one or more financial
institutions to provide regular financing to its franchisees. The opening of
additional Restaurants in the same market areas could have the effect of
attracting customers from existing Restaurants located in that area and
thereby reduce sales volumes in existing Restaurants.
IMPACT OF NATIONAL AND REGIONAL ECONOMIES
The health of national and regional economies has a significant
impact on the restaurant industry. An expanding economy provides disposable
income, which causes customers to eat out more frequently. A national or
regional economic slow down will, in all probability, adversely impact the
operations of restaurants, including those owned and franchised by the
Company. This, in turn, will adversely impact the Company's royalty income
and income from Company-owned Restaurants. The Company's franchises are still
concentrated in a few regions of the U.S., and therefore adverse economic
conditions in those regions may have a materially adverse impact on the
Company's profitability. Finally, because many Company franchisees are in
areas affected by severe winter weather, such weather could adversely impact
the Company's royalty income.
LABOR AND OTHER COSTS
Costs of labor and employee benefits are significant expenses in the
restaurant industry. While such costs have remained stable in recent years, a
significant increase in wages throughout the country could adversely impact
the Company and other restaurant businesses. Costs of food and non-food items
are also significant factors in the restaurant industry and, finally, the cost
of marketing may negatively impact restaurant operations, particularly in
competitive markets where the brand name is not yet established.
CONFLICTS OF INTEREST
Mr. Richard F. Schaden, an officer and director of the Company, owns
interests in entities that hold two Quizno's Area Directorships. Mr.
Frederick H. Schaden, a director of the Company, also owns an interest in one
of those entities. Conflicts of interest may arise with respect to
transactions between the Company and Area Directors in which officers or
directors of the Company hold an interest, such as when loans are made by the
Company to such Area Directors. Company-owned stores will also present
conflict of interest issues, particularly with respect to the location of
Company-owned stores in relation to franchisee-owned stores and the amounts
allocated by the Company for goods and services that are also provided by the
Company to its franchisees for a fee, such as advertising services.
GENERAL LIABILITY INSURANCE
Although the Company carries general liability and commercial
insurance of up to $1,000,000 per occurrence and $2,000,000 in the aggregate,
subject to no deductible, there can be no assurance that this insurance will
be adequate to protect the Company against any general, commercial and/or
product liability claims. Any general, commercial and/or product liability
claim which is not covered by such policy, or is in excess of the limits of
liability of such policy could have a material adverse effect on the financial
condition of the Company. There can be no assurance that the Company will be
able to maintain this insurance on reasonable terms.
DEPENDENCE ON RICHARD E. SCHADEN
The success of the Company's business will be dependent upon Mr.
Richard E. Schaden, its Chief Executive Officer, who is also principal
stockholders of the Company. The Company's anticipated growth also depends
upon its ability to attract and retain skilled management personnel. The
Company has obtained key-man life insurance in the amount of $1,000,000 on Mr.
Schaden's life.
CONTROL BY EXISTING STOCKHOLDERS
Richard E. and Richard F. Schaden (the "Schadens") own an aggregate
of approximately 54% of the outstanding voting Common Stock of the Company,
and rights to purchase an additional approximately 181,000 shares in the
future. Shareholders do not have cumulative voting rights with respect to the
election of directors. The Schadens have the ability to elect all of the
directors of the Company and to thereby direct or substantially influence the
management, policies and business operations of the Company and to have the
power to control the outcome of any matter submitted to the vote of the
Company's stockholders.
NO DIVIDENDS ANTICIPATED
The Company has never paid any cash dividends on its Common Stock.
The Company anticipates that in the future, earnings, if any, will be retained
for use in the business, and it is not anticipated that cash dividends with
respect to the Common Stock will be paid in the foreseeable future.
POSSIBLE PRICE OF THE COMPANY'S COMMON STOCK
The market price of the Company's Common Stock has been highly
volatile. Factors such as the Company's operating results and the small
volume of shares of its Common Stock that are traded have a significant effect
on the market price of the Company's Common Stock. In addition, market prices
for the securities of many emerging and small capitalization companies have
experience wide fluctuations in response to variation in quarterly operating
results and general economic indicators and conditions, as well as other
factors beyond the control of the Company.
PREFERRED SHARES AVAILABLE FOR ISSUANCE
The Company has one million shares of Preferred Stock authorized.
The Company has issued 146,000 shares of Class A Preferred Stock, 100,000
shares of Class B Preferred Stock and 200,000 shares of Class C Preferred
Stock, upon which monthly dividends are paid. Such Classes of Preferred Stock
are senior to the Common Stock as to dividends and liquidation preferences.
Shares of Preferred Stock may be issued by the Company in the future without
shareholder approval and upon such terms as the Board of Directors may
determine, including the payment of dividends. The rights of the holders of
Common Stock will be subject to and may be affected adversely by the rights of
holders of shares of any Preferred Stock that may be issued in the future.
The availability of Preferred Stock, while providing desired flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of discouraging a third party from acquiring control of the Company
through the purchase of shares of the Common Stock.
GOVERNMENT REGULATIONS
The restaurant business is subject to extensive federal, state and
local government regulations relating to the development and operation of
restaurants, including regulations relating to building and zoning
requirements and the preparation and sale of food, and laws that govern the
Company's relationship with its employees, such as minimum wage requirements,
overtime and working conditions and citizenship requirements. The failure to
obtain or retain food licenses or substantial increases in the minimum wage
could adversely affect the operation of the Restaurants. The Company is also
subject to federal regulations and certain state laws which regulate the offer
and sale of franchises to its franchisees.
CONTINUED LISTING AND PENNY STOCK REGULATIONS
The daily trading price of the Company's Common Stock has been
quoted on the Nasdaq SmallCap Market since its initial public offering. There
can be no assurance that quotation on the Nasdaq SmallCap Market will be
maintained. In August 1997, The Nasdaq Stock Market, Inc. issued new listing
maintenance requirements for the Nasdaq SmallCap Market, which may adversely
affect the ability of listed companies to maintain their Nasdaq SmallCap
listings. If the Company fails to meet the maintenance criteria in the future,
the trading price for the Common Stock would not be carried in many
newspapers, and the shares might be subject to certain rules of the Securities
and Exchange Commission relating to "penny stocks." These rules require that
broker-dealers must apply a special suitability standard for purchasers of
stocks of companies subject to such rules and receive the purchaser's prior
written consent for the transaction. These rules, if applied to the Company's
Common Stock in the future, may inhibit the ability of broker-dealers to sell
the Company's Common Stock in the secondary market.
IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE. Future sales by existing
stockholders could adversely affect the prevailing market price of the Common
Stock. As of September 30, 1997 the Company had 2,904,567 shares of Common
Stock outstanding. Of these shares, approximately 1,300,000 shares are freely
transferrable without restrictions. The remainder, principally owned by
insiders, may be sold into the public market from time to time in the future,
and thereby become freely transferrable. As of September 30, 1997, 6,989
shares had been issued and approximately 280,000 shares were issuable upon the
exercise of outstanding options. The shareholders of the Company have
authorized the Company to issue options covering up to 460,000 shares of
Common Stock. The Company intends to register Common Stock underlying such
options, which are held principally by the Company's employees, directors and
advisors, before the end of 1997. Upon exercise of such options, the shares
would be eligible for immediate sale in the public market. In addition,
446,000 shares of Common Stock have been reserved for issuance upon conversion
of the outstanding shares of Class A, Class B and Class C Preferred Stock of
the Company, and one of the Company's major lenders has the right to convert
debt or exercise warrants for 372,847 shares of Common Stock.
FORWARD-LOOKING STATEMENTS. Certain of the information discussed in
this Prospectus are forward-looking statements that involve risks and
uncertainties that might adversely affect the Company's operating results in
the future in a material way. Such risks and uncertainties include, without
limitation, the risk factors discussed above. Many of these risks are beyond
the control of the Company.
USE OF PROCEEDS
The net proceeds from the sale of the Shares will be received by the
Selling Stockholders. The Company will not receive any of the proceeds from
any sale of the Shares by the Selling Stockholders. The Company will receive
funds upon the exercise of the Warrants, currently held by the Selling
Stockholders, that are exercisable for the Shares. Such funds, when received
by the Company, will be used for general corporate purposes, including working
capital.
SELLING STOCKHOLDERS
The table below sets forth information as of September 30, 1997 with
respect to the Selling Stockholders, including names, holdings of shares of
Common Stock prior to the offering of the Shares, the number of Shares being
offered for each account, and the number and percentage of shares of Common
Stock to be owned by the Selling Stockholders immediately following the sale
of the Shares, assuming all of the offered Shares are sold.
<TABLE>
<CAPTION>
SHARES OF
SHARES OF COMMON STOCK
COMMON STOCK TO BE
BENEFICIALLY SHARES OF BENEFICIALLY
OWNED BEFORE COMMON STOCK OWNED AFTER
NAME THE OFFERING(1) BEING OFFERED THE OFFERING
- ---- --------------- ------------- ------------
<S> <C> <C> <C>
R. David Van Treuren 25,200 25,200 0
William T. Richey 25,000 25,000 0
S. James Horning 18,900 18,900 0
Michael J. Zales 17,800 17,800 0
Mary C. Lloyd 9,500 9,500 0
Neil A. Cox 2,300 2,300 0
Judy L. Clarke 1,300 1,300 0
____________________
</TABLE>
(1) All shares shown are issuable upon the exercise of Warrants currently
owned by such persons and exercisable at $5.00 per share.
RELATIONSHIP BETWEEN THE COMPANY AND THE SELLING STOCKHOLDERS
The Selling Stockholders are unaffiliated with the Company. Each
Selling Stockholder was employed by Rocky Mountain Securities & Investments,
Inc. at the time that entity was the Representative of the underwriters of the
Company's initial public offering. The Warrants currently held by the Selling
Stockholders were initially issued to the Representative as part of its
underwriting compensation.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Stockholders, or by
their pledgees, donees, transferees or other successors in interest, may be
effected from time to time in one or more of the following transactions: (a)
to underwriters who will acquire the Shares for their own account and resell
them in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale (any public offering price and any discount or concessions allowed or
reallowed or paid to dealers may be changed from time to time); (b) through
brokers, acting as principal or agent, in transactions (which may involve
block transactions) on the Nasdaq Stock Market or on one or more exchanges on
which the Shares are then listed, in special offerings, exchange distributions
pursuant to the rules of the applicable exchanges or in the over-the-counter
market, or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
fixed prices; (c) directly or through brokers or agents in private sales at
negotiated prices; or (d) by any other legally available means. In addition,
any securities covered by this Prospectus which qualify for sale pursuant to
Rule 144 of the Securities Act ("Rule 144") may be sold under Rule 144 rather
than pursuant to this Prospectus. All discounts, commissions or fees incurred
in connection with the sale of the Common Stock offered hereby will be paid by
the Selling Stockholders, except that the expenses of preparing and filing
this Prospectus and the related Registration Statement with the Securities and
Exchange Commission, and of registering or qualifying the Common Stock will be
paid by the Company.
The Selling Stockholders and such underwriters, brokers, dealers or
agents, upon effecting a sale of the Shares, may be considered "underwriters"
as that term is defined by the Securities Act.
Underwriters participating in any offering made pursuant to this
Prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents participating
in such transaction may receive brokerage or agent's commissions or fees.
If required at the time a particular offering of the Shares is made,
a Prospectus Supplement would be distributed which would set forth the amount
of the Shares being offered and the terms of the Offering, including the
purchase price or public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter
for the Shares purchased from the Selling Stockholders, any discounts,
commissions and other items constituting compensation from the Selling
Stockholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers. The Company has been informed that no
underwriter for the Shares has been engaged at this time.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the Shares may not be sold unless the Shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and complied with.
The Company has agreed that it will bear all costs, expenses and
fees in connection with the registration of the Shares.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article 109 of the Colorado Business Corporation Act generally
provides that a corporation may indemnify its directors, officers, employees
and agents against liabilities and action, suit or proceeding whether civil,
criminal, administrative or investigative and whether formal or informal (a
"Proceeding"), by reason of being or having been a director, officer,
employee, fiduciary or agent of the Company, if such person acted in good
faith and reasonably believed that his conduct, in his official capacity, was
in the best interests of the Company (or, with respect to employee benefit
plans, was in the best interests of the participants of the plan), and in all
other cases that his conduct was at least not opposed to the Company's best
interests. In the case of a criminal proceeding, the director, officer,
employee or agent must have had no reasonable cause to believe that his
conduct was unlawful. Under Colorado Law, the Company may not indemnify a
director, officer, employee or agent in connection with a proceeding by or in
the right of the Company if the director is adjudged liable to the Company, or
in a proceeding in which the directors, officer employee or agent is adjudged
liable for an improper personal benefit.
The Company's Articles of Incorporation provide that the company
shall indemnify its directors, and officers, employees and agents to the
fullest extent and in the manner permitted by the provisions of the laws of
the State of Colorado, as amended from time to time, subject to any
permissible expansion or limitation of such indemnification, as may be set
forth in the by-laws of the Company or any shareholders' or directors'
resolution or by contract. Consistent with its Articles of Incorporation, the
Company has entered into agreements to provide indemnification for the
Company's directors and certain officers.
Insofar as indemnification for liabilities under the Act may be
permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the company has been informed that in the opinion
of the Commission, such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the Shares offered hereby is being passed upon for
the Company by Lyle B. Stewart, P.C., Denver, Colorado.
EXPERTS
The consolidated financial statements of the Company as of December
31, 1995 and 1996 and for each of the three years in the period ended December
31, 1996 appearing in the Form 10-KSB have been audited by Ehrhardt Keefe
Steiner & Hottman P.C., independent auditors, as stated in their report
appearing therein, and have been incorporated herein by reference in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing. With respect to the unaudited interim consolidated
financial information in the Company's quarterly reports for the periods ended
March 31, June 30, and September 30, 1997, each filed on Forms 10-QSB or as
amended on Forms 10-QSB/A, the independent certified public accountants have
not audited or reviewed such consolidated financial information and have not
expressed an opinion or any other form of assurance with respect to such
consolidated financial information.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the estimated expenses to be incurred by
the Registrant in connection with the issuance and distribution of the Shares
being registered hereby.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 170
Accountants' Fees and Expenses 1,000*
Legal Fees and Expenses 4,000*
Miscellaneous 2,000*
TOTAL $7,170*
</TABLE>
____________________
* Estimated, subject to change.
The Company will bear all of the above expenses of the registration
of the Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
See "INDEMNIFICATION OF OFFICERS AND DIRECTORS" in the Prospectus.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Specimen copy of Common Stock Certificate*
5.1 Opinion of Lyle B. Stewart, P.C.*
23.1 Consent of Ehrhardt Keefe Steiner & Hottman P.C.*
23.2 Consent of Lyle B. Stewart, P.C. (included in
Exhibit 5.1)
24.1 Power of Attorney (included in Part II of
Registration Statement)
* Filed herewith
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
-------- -------
apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission (the "Commission") by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Denver, Colorado on October 23, 1997.
THE QUIZNO'S CORPORATION
By /s/ Patrick E. Meyers
------------------------
Patrick E. Meyers,
Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below in so signing also makes, constitutes and appoints Richard E.
Schaden and Patrick E. Meyers, and each of them, his or her true and lawful
attorney-in-fact, with full power of substitution, for him in any and all
capacities, to execute and cause to be filed with the Securities and Exchange
Commission any and all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in
connection therewith, granting unto said attorney-in-fact and agent full power
to do and perform each and every act that he or she might do in connection
with the premises, and hereby ratifies and confirms all that said
attorney-in-fact and agent or his other substitute or substitutes may do or
cause to be done by virtue hereof.
Signature Title Date
- --------- ----- ----
/s/ Richard E. Schaden President, Chief Executive Officer
Richard E. Schaden and Director (Principal Executive
Officer) October 23, 1997
/s/ John L. Gallivan Chief Financial Officer and
John L. Gallivan Treasurer (Principal Financial
and Accounting Officer) October 23, 1997
/s/ Richard F. Schaden Vice President, Secretary
Richard F. Schaden and Director October 23, 1997
/s/ Brownell M. Bailey Director October 23, 1997
Brownell M. Bailey
/s/ Mark L. Bromberg Director October 23, 1997
Mark L. Bromberg
/s/ Eric Lawrence Director October 23, 1997
J. Eric Lawrence
/s/ Frederick H. Schaden Director October 23, 1997
Frederick H. Schaden
EXHIBIT INDEX
Exhibit
Number DESCRIPTION
- ------ -----------
4.1 Specimen copy of Common Stock Certificate*
5.1 Opinion of Lyle B. Stewart, P.C.*
23.1 Consent of Ehrhardt Keefe Steiner & Hottman P.C.*
23.4 Consent of Lyle B. Stewart, P.C.
(included in Exhibit 5.1)
24.1 Power of Attorney (included in Part II of
Registration Statement)
* Filed herewith
COMMON STOCK QUIZNO'S COMMON STOCK
CLASSIC SUBS
INCORPORATED UNDER THE LAWS OF COLORADO
SEE REVERSE
FOR CERTAIN
DEFINITIONS
COMMON STOCK
($001 PAR VALUE)
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES
OF COMMON STOCK, $.001 PAR VALUE OF,
THE QUIZNO'S CORPORATION
transferable on the books of the Corporation in person or by attorney duly
authorized in writing upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are issued and shall be
held subject to all the provisions of the Corporation's Articles of
Incorporation and any amendments thereof, copies of which are on file with the
Transfer Agent, to all the provisions of which the holder hereof by acceptance
of this certificate assents.
This certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
WITNESS the facsimile signatures of its duly authorized officers.
Dated:
____________________________ ________________________
Secretary President
THE QUIZNO'S CORPORATION
CORPORATE SEAL
COLORADO
THE QUIZNO'S CORPORATION
TRANSFER FEE $10.00
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM as tenants common UNIF GIFT MIN ACT______Custodian____
TEN ENT as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with right under Uniform Gifts to Minors
Act_________________________________
(State)
UNIF TRF MIN ACT_____Custodian (until
age______)
_________under Uniform Transfers
(Minor)
to Minors Act______________________
(State)
Additional abbreviations may also be used though not in the above list
FOR VALUE RECEIVED,________________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________
(please print or typewrite name and address, including zip code, of assignee)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
__________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated:_________________________
X________________________
X________________________
NOTICE: the signature(s) to this assignment
must correspond with the name(s) as written
upon the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.
SIGNATURE(S) GUARANTEED
By_______________________
The signature(s) should be guaranteed by an eligible guarantor institution,
(Banks, stock brockers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant
to S.E.C. Rule 17ad-15.
LYLE B. STEWART
ATTORNEY AT LAW
(303) 267-0920
Fax (303) 267-0922
[email protected]
Board of Directors October 24, 1997
The Quizno's Corporation
1099 18th Street, Suite 2850
Denver, CO 80202
Gentlemen:
We have acted as counsel to The Quizno's Corporation (the "Company") in
connection with the proposed sale of shares of its common stock, par value
$.001 per share, by the selling stockholders named in the Registration
Statement on Form S-3 (the "Registration Statement") filed by the Company on
or about the date hereof with the Securities and Exchange Commission, under
the Securities Act of 1933, as amended.
In connection therewith, we have examined and relied upon such corporate
records and other documents, instruments and certificates and have made such
other investigation as we deem appropriate as basis for the opinion set forth
below.
Based upon the foregoing, we are of the opinion that the shares of common
stock to be sold by the selling stockholders, when acquired by them from the
Company and sold in the manner described in the Registration Statement and the
Prospectus forming a part thereof, will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus.
Very truly yours,
/s/Lyle B. Stewart, P.C.
Lyle B. Stewart, P.C., 3751 South Quebec St., Denver, CO 80237
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Quizno's Corporation and Subsidiaries on Form S-3, of our report dated
February 28, 1997 appearing in the annual report on Form 10-KSB of The
Quizno's Corporation and Subsidiaries for the year ended December 31, 1996 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
October 23, 1997
Denver, Colorado
